Process: 69/2018-T

Date: January 7, 2019

Tax Type: ISP

Source: Original CAAD Decision

Summary

This CAAD arbitration case (Process 69/2018-T) concerns the legality of additional ISP (Tax on Petroleum Products and Energy), CSR (Road Service Contribution), and VAT assessments totaling €56,473.66 against a fuel supplier. The dispute arose from supplies of coloured and marked diesel (GCM) to the dredge vessel B... during 2015. The Tax Authority corrected the assessments arguing that invoices were issued to intermediary C... rather than directly to the vessel holding the micro-circuit card authorizing GCM purchases. The claimant argued that all substantive requirements for ISP exemption under Article 89(1)(c) and (h) of the Excise Tax Code were met: the fuel was actually supplied to and used by vessel B..., which held a valid micro-circuit card, and the supply was supervised by GNR's Fiscal Brigade. The company contended that requiring invoices to be issued directly to vessels was impractical since vessels lack legal personality. The case highlights a fundamental distinction between formal invoice requirements and substantive compliance with ISP exemption conditions. The claimant requested declaration of illegality of the assessments through a sole arbitrator proceeding under RJAT (Regime Jurídico da Arbitragem Tributária), as the claim value fell below €60,000. The joinder of claims relating to ISP, CSR, and VAT was permitted under Article 3(1) RJAT since all assessments arose from the same factual circumstances and required interpretation of the same legal principles governing GCM marketing controls.

Full Decision

ARBITRAL DECISION

The arbitrator Raquel Franco, appointed by the Deontological Board of the Administrative Arbitration Centre to form the Arbitral Tribunal constituted on 07-05-2018, decides in the terms and on the grounds that follow:

1. Report

On 26-02-2018, A..., S.A., a company with the single registration number and collective person number..., with registered office at..., n.º ..., ...-... Lisbon, whose local peripheral service is the Lisbon financial services office –..., comes, pursuant to the provisions of articles 2.º, n.º 1, letter a), 5.º, n.º 3, letter a), 6.º, n.º 2, a), 10.º, n.º 1, letter a) and n.º 2, all of Decree-Law n.º 10/2011, of 20 January, which establishes the Legal Regime for Arbitration in Tax Matters ("RJAT"), to request the constitution of a collective arbitral tribunal[1] with a view to the declaration of illegality of the tax act embodied in the additional assessments of Tax on Petroleum Products and Energy (ISP), Road Service Contribution (CSR) and respective compensatory interest, relating to the year 2015, in the total amount of € 50,013.49, identified with the Assessment Record n.º ... of 13.11.2017 and of the tax act of Value Added Tax (VAT) for the period 2015/05, embodied in the VAT assessment statement n.º 2017... of 29.12.2017 and in the accounts settlement assessment statement n.º 2018... of 02.01.2018, in the total amount of € 5,884.32, as well as in the respective VAT interest assessment statement n.º 2017... of 29.12.2017 and the accounts settlement statement n.º 2018... of 02.01.2018, in the total amount of € 575.85. The total economic value of the claim is € 56,473.66.

Although the constitution of a collective arbitral tribunal was requested, the Claimant does not designate an arbitrator and the value of the claim does not reach € 60,000 (the value corresponding to twice the jurisdiction of the Central Administrative Court), so, pursuant to the provisions of n.º 2 of article 5.º of the RJAT, the arbitral tribunal must function only with a sole arbitrator[2].

The request for constitution of the arbitral tribunal was accepted by the Honorable President of the CAAD and automatically notified to the Tax and Customs Authority on 26-02-2018.

Pursuant to the provisions of letter a) of n.º 2 of article 6.º and letter b) of n.º 1 of article 11.º of Decree-Law n.º 10/2011, of 20 January, in the wording introduced by article 228.º of Law n.º 66-B/2012, of 31 December, the Deontological Board appointed the undersigned as arbitrator of the sole arbitral tribunal and notified the parties of this appointment on 13-04-2018.

Thus, in accordance with the provisions of letter c) of n.º 1 of article 11.º of Decree-Law n.º 10/2011, of 20 January, in the wording introduced by article 228.º of Law n.º 66-B/2012, of 31 December, the sole arbitral tribunal was constituted on 07-05-2018, following the relevant legal procedures.

2. Procedural Sanitation

The arbitral tribunal was regularly constituted, in accordance with the provisions of articles 2.º, n.º 1, letter a), and 10.º, n.º 1, of DL n.º 10/2011, of 20 January, and is competent.

The Parties are duly represented, are legitimate and enjoy legal personality and capacity (all pursuant to articles 4.º and 10.º, n.º 2, of the same decree-law and article 1.º of Order n.º 112-A/2011, of 22 March).

The proceedings are not subject to any voidness.

Regarding the joinder of claims, the Claimant states that it is the same, although it has motivated different tax acts[3], the fact that gave rise to the contested corrections, namely the non-compliance with the rules for marketing and control of coloured and marked diesel (GCM) by the respective marketer. She argues that it is also, in the present case, a matter of the interpretation and application of the same principles and rules of law.

Pursuant to the provisions of n.º 1 of article 3.º of the RJAT, the joinder of claims, even if relating to different acts, is admissible when the success of the claims depends essentially on the assessment of the same factual circumstances and the interpretation and application of the same principles or rules of law. It appears to us that this is the case in these proceedings, so the joinder of claims is deemed admissible.

3. Positions of the Parties

In the Claimant's view, it has been demonstrated in these proceedings that the supplies in question were made to the dredge B..., holder of a green diesel card. Notwithstanding the fact that this supply was intermediated by various entities – C... and D...– it is clear that the final recipient of the coloured and marked diesel was the dredge B..., as indeed was attested by the officer of the Fiscal Brigade of the GNR present at the time of the supplies.

The tax inspection services base the corrections in question on the circumstance that the invoice titling the supplies was issued to C... and not to the dredge B.... At no time did the inspection services question the purpose and use of the coloured and marked fuel, nor the fact that the dredge B... was the holder of a valid micro-circuit card. In fact, the inspection services base the correction in question only and solely on the alleged non-compliance with a formality, namely the issuance of the invoice to the vessel that used the fuel.

However, as has been demonstrated in these proceedings and is hereby reiterated, the tax administration has no reason on its side. This is because the supply was made to the dredge B..., which is the holder of a micro-circuit card, the validity of which was verified and attested by the officer of the Fiscal Brigade of the GNR at the time of the supplies, showing that all the prerequisites upon which the application of the exemption in question depends have been met.

The supply of coloured and marked diesel depends on the use of the said micro-circuit card issued to the vessel and is supervised by the Fiscal Brigade of the GNR.

Regarding the exemptions from ISP for use in commercial navigation, it appears from the above that these are granted on the basis of the purpose given to petroleum products, being relevant for this only and objectively the equipment – or rather the vessel on which the petroleum products will be used. It is for this reason, moreover, that documents additional to the vessel are required under n.º 34.º of Order n.º 117-A/2008, of 8 February, since it is from the verification of certain conditions relating to the vessel that the issuance of the micro-circuit card depends, which enables the application of the exemption.

Thus, the exemptions provided for in letters c) and h) of n.º 1 of article 89.º of the Excise Tax Code are granted by reference to the vessel that will consume the petroleum product and not by reference to the taxpayer. Indeed, as regards the equipment authorized to consume coloured and marked diesel, Order n.º 205/2014, of 8 October, refers to equipment and not to taxpayers – or rather natural or legal persons.

In the same sense, see the Excise Tax Manual of the DGAIEC which states that "The supply of vessels with coloured and marked diesel is conditional on the mandatory use of an electronic card assigned to the respective beneficiary, for each vessel" (cf. Excise Tax Manual of the DGAIEC, chapter III – 3.2., p. 3.2.2.3., emphasis ours).

The issuance of the invoice in the name of the micro-circuit card holder does not appear to be possible insofar as the holder of the micro-circuit card is the vessel, in the present case the dredge B.... Now, the dredge has no legal personality nor tax personality, for this reason it would never be possible to issue the invoice to the holder of the micro-circuit card.

What the cited legal provision requires is the issuance of an invoice to the holder of the micro-circuit card. In other words, article 93.º, n.º 5, of the Excise Tax Code requires that in the process of marketing coloured and marked diesel there be the issuance of an invoice to the holder of that card, an invoice that may be issued by an intermediary. But nowhere in the cited legal provision does it result in the requirement that such invoice be issued by the party responsible for the supply, in the present case by the Claimant. Note that article 93.º, n.º 5, only refers to "(…) corresponding invoices not being issued (…)", not specifying that such invoices must be issued by the entity responsible for the supply.

In the present case, as has been demonstrated, an invoice was issued to the owner of the dredge B... (cf. doc. n.º 9). As was explained, given that the supply was requested by one of the entities of the economic group in which E... is included and intermediated by two entities –F... and C...– the final invoice to the owner of the dredge was issued by D.... Thus, with an invoice existing to the holder of the micro-circuit card, the provision of article 95.º, n.º 3, of the Excise Tax Code is shown to be met, and for this reason the cancellation of the correction in question must be imposed.

The interpretation advocated by the tax administration regarding invoice issuance conflicts with the rationale of the micro-circuit card. By requiring that the invoice be issued to the holder of the card, as a prerequisite for the application of the tax benefit, it is required of the oil company to confirm whether the holder of the card is the entity with which it enters into commercial relations and when it is not, to confirm the relationship between the two entities. In practice, this interpretation will lead to oil companies, such as the Claimant, abstaining from selling fuel with tax benefit, notwithstanding that the vessel meets all the prerequisites upon which the application of it depends, in light of the burdens that such verification entails and the possible tax liability that may fall upon them.

Finally, it should be noted that in the present case the fact that the invoice was issued in the name of C... does not prevent control of the allocation of coloured and marked diesel, since such allocation was confirmed by the Fiscal Brigade of the GNR at the time of supply. The Fiscal Brigade of the GNR confirmed, at the time of supply, that the fuel's final destination was the dredge B..., holder of a valid green diesel card and, therefore, eligible for purposes of the tax benefit under analysis.

On the other hand, the Tax Administration ("AT") understands that:

The Claimant is in clear disagreement with the legislative option regarding the marketing of GCM, insofar as it advocates the indirect marketing of GCM through various intermediaries, who themselves assume responsibility for the transaction with the beneficiary of the GCM, whereas the GCM marketing regime requires a direct relationship from the supplier to the beneficiary of the GCM, entitled, among others, by the issuance of the corresponding sales invoice identifying (name and/or NIF) the holder of the benefit.

The control system implemented in the context of GCM supply aims to enable the AT to subsequently control the reality and regularity of GCM supplies carried out, based on records and accounting documentation that prove the supply circuit from the supplier to the authorized recipient and legally provided purpose.

It is in light of the level of fraud to which the sector is exposed that the required measures and their degree of stringency must be understood, with the latest amendment to the wording of n.º 5 of article 93.º of the CIEC being based on such reasons, by reinforcing the obligation to issue an invoice for each GCM supply in the name and with the tax identification of the holder of the beneficiary's card, which is decisive for assessing the regularity, in accordance with law, of the supply circuit of this type of product.

In any case, the invoices presented by the Claimant to support the successive marketing of 119,600 liters of GCM up to the supply of the dredge do not permit the traceability of the product, because the sales invoice from the last agent in the chain of transactions to the holder of the benefit does not indicate the quantity of the product transacted and shows a sales price that appears to be lower than the price paid.

Although the procedure described by the witness presented by the Claimant may exist in the business world of the Claimant and its economic partners, and given that the control of GCM marketing is at issue, in the terms defined by the CIEC and regulatory orders, it could never be understood that such conduct would be in accordance with the legal regime established in this area.

As for the Claimant's argument that it is not possible to issue the invoice in the name of the holder of the card insofar as the holder of the micro-circuit card is the vessel, in the present case the dredge B..., the AT responds that the latter has no legal personality nor tax personality, emphasizing that such an interpretation would be contrary to what results from the provisions of n.º 2 to 8 of Order n.º 117-A/2008, of 8 February. The beneficiary of the exemption can only be a natural or legal person, which will normally coincide with the holder of the card, and in the particular case of commercial navigation, the card, for practical reasons of system operation, is issued by the DGADR in the name of each vessel, which is due, namely, to the fact that one person can be the owner of several vessels and each vessel must be duly identified for purposes of controlling the benefit.

Thus, and given that, in accordance with n.º 5 of Order n.º 361-A/2008, coloured and marked diesel can only be sold to beneficiaries of an exemption or reduced rate of ISP who are holders of micro-circuit cards issued for this purpose by the DGADR, it must be concluded that, in the case of commercial navigation, the beneficiary is the owner of the vessel for which a card has been issued and only to this person can this conditionally sold product be sold.

Having failed to ensure, cumulatively with compliance with the other obligations at the time of sale, the issuance of the corresponding invoice in the name of the holder of that benefit, the Claimant becomes responsible, by virtue of n.º 5 of article 93.º of the CIEC, for taxation corresponding to the difference between the level of taxation applicable to road diesel and the rate of tax applicable to GCM.

4. Factual Matters

4.1 Facts Established

The following facts are deemed established:

  • The Claimant is a limited company whose principal activity is the wholesale of petroleum products, identified with the CAE 46711.

  • The Claimant is a subject to Corporate Income Tax, being covered by the Special Tax Regime for Groups.

  • The Claimant is a subject liable for VAT, classified in the normal monthly periodicity regime.

  • On 05.05.2015 the Claimant invoiced four supplies of coloured and marked diesel (GCM), in the quantities of 29,969 l, 29,973 l, 29,970 l, 29,688 l (totalling 119,600 l), to the entity C..., S.L.

  • The final recipient of the quantities of GCM identified above was the dredge identified with the name "...B...".

  • The dredge B... is not the property of C..., S.L., the entity with which the Claimant established the commercial relationship in the context of which the diesel supplied was invoiced.

  • The dredge B... is the property of the Spanish law company E..., S.A.

  • In the commercial context, the Claimant was not contacted by the said dredge or by the owning entity, but by C..., S.L. (cf. audio recording of witness testimony, minute 16, second 50).

  • C..., S.L. acts as an intermediary, in the regional context, in fuel supply operations to vessels.

  • This type of intermediation has several levels of complexity and some large economic groups have "purchasing departments" that contract for vessel supply, subsequently allocating the respective cost according to the selected cost matrix, without the Claimant now having (or should have) knowledge (cf. audio recording of witness testimony, minute 26, second 50; minute 28, second 00).

  • In the generality of supplies made by the Claimant, intermediation by various entities is a common practice (cf. audio recording of witness testimony, minute 15, second 00).

  • The dredge B... is the holder of a beneficiary card that attests to the authorization to benefit from the GCM exemption, issued by the General Directorate for Agriculture and Rural Development (DGADR).

  • Once contacted by the intermediary, the Claimant carries out prior due diligence with the Ministry of Agriculture, in order to confirm whether the vessel, for whose coloured and marked diesel is intended, is the holder of the green diesel card (cf. audio recording of witness testimony, minute 04 second 05).

  • The sales of GCM in question in the present proceedings were recorded in the automatic payment terminal (TPA) n.º ....

  • This type of supply is carried out in the presence of the Fiscal Brigade of the GNR (...) which is on permanent duty in most national ports (cf. audio recording of witness testimony, minute 04 second 54; minute 49 second 28).

  • The officer of the Fiscal Brigade of the GNR present on the spot confirms, upon presentation, that the vessel is the holder of the green diesel card (cf. audio recording of witness testimony, minute 05 second 55).

  • The validity of the card is verified by the officer of the Fiscal Brigade of the GNR through the electronic terminal (cf. audio recording of witness testimony, minute 06 second 55).

  • Once the validity of the card is confirmed, the officer of the Fiscal Brigade of the GNR authorizes the supply, which then begins (cf. audio recording of witness testimony, minute 07 second 40).

  • The Fiscal Brigade of the GNR thus confirms that the coloured and marked diesel is destined for the vessel and that this vessel is the holder of the micro-circuit card (cf. audio recording of witness testimony, minute 07 second 00).

  • The officer of the Fiscal Brigade of the GNR confirms that the coloured and marked diesel has no other purpose (cf. audio recording of witness testimony, minute 07 second 20).

  • Once the supply itself is completed, the officer of the Fiscal Brigade of the GNR "closes" the operation electronically with the insertion of a Fiscal Brigade card and a PIN code (cf. audio recording of witness testimony, minute 07 second 20).

  • Next, a document is issued by the electronic terminal proving the supply which contains: the identification of the terminal, the time and identification of the transaction, the identification of the entity making the supply, the fiscal identification number of the officer who witnessed the operation, the number of the vessel's card, the fiscal identification number of the beneficiary, the ceiling and the total accumulated before and after the supply and the amount supplied (cf. exemplary document presented by the witness and audio recording of witness testimony, minute 08 second 40, minute 45 second 00).

  • This operation gives rise to an electronic file, validated by the Fiscal Brigade of the GNR, which contains the card number, and this is the file that serves as the basis for the ISP assessment (cf. audio recording of witness testimony, minute 09 second 58).

  • On the basis of this file, the tax administration can confirm that the vessel supplied is eligible for purposes of ISP exemption, as well as the absence of any deviation of the coloured and marked diesel from the declared beneficiary (cf. audio recording of witness testimony, minute 10 second 45).

  • With the "closure" of the supply, the officer of the Fiscal Brigade of the GNR confirms that the coloured and marked diesel was supplied to the authorized vessel (cf. audio recording of witness testimony, minute 09 second 20).

  • During the said supplies, the Claimant proceeded to record in the electronic control system, having used the beneficiary card n.º ... issued in the name of the dredge B....

  • The Claimant issued an invoice in the name of the entity C..., S.L., identifying as "delivery location" the dredge "B..., ...-... Aveiro", and indicating the quantities 29,969 l, 29,973 l, 29,970 l, 29,688 l (totalling 119,600 m3) of "coastal navigation diesel without bio".

  • The company C... S.L., with registered office in..., invoiced, on 12.05.2015, 119,600 m3 of green diesel at € 570.65 per m3, in the total amount of € 68,249.74, to the company F..., with registered office in the Netherlands.

  • The company F..., with registered office in the Netherlands, invoiced, on 15.05.2015, the same 119,600 l of GCM to the entity D....

  • D... invoiced 180,000 m3 of GCM (corresponding to 119,600 from A... and 59,992 from another supply to the company owning the dredge B...) to the entity E..., holder of the dredge in question.

  • The delivery notes attached to the invoices contain the stamp with reference to the dredge B....

  • In the course of 2016, the entity E..., S.A., owner of the dredge B..., was subject to an inspection action, identified with n.º..., aimed at its dredges that were executing work in Portuguese ports.

  • In the context of that inspection action, the inspection team identified the four supply records that occurred on 05.05.2015 at TPA n.º ... (under the responsibility of the Claimant) with the beneficiary card n.º..., issued in the name of the dredge B....

  • The inspection team verified that in the accounting of the company E..., S.A., there was no invoice issued by A... relating to the said supplies, having been presented only by E..., S.A., delivery notes (n.º..., relating to 29,969 liters, n.º..., relating to 29,973 liters, n.º..., relating to 29,688 liters, and n.º..., relating to 29,688 liters, totalling 119,600 liters of GCM).

  • The inspection team requested from the Claimant a copy of the invoices relating to the GCM supply records that occurred on 05.05.2015, as per a copy of the cross-verification notification "(…) to the supplies of coloured and marked diesel effected by the dredge B...".

  • The Claimant sent by email a copy of invoice n.º 4110096030, of 11.05.2015, issued in the name of the company C... S.L., with registered office in..., in Spain, regarding which it was found to be neither the holder of the electronic/micro-circuit card used, nor authorized to consume the product in question.

  • On 09.01.2017, the Claimant was notified of the draft conclusions of the inspection procedure n.º OI2016..., in which the Anti-Fraud Customs Services Directorate identified an alleged irregularity and the violation of the provisions of n.º 5 of article 93.º of the Excise Tax Code combined with n.º 8 of Order n.º 361-A/2008, of 12 May, by considering that "GCM can only be acquired by holders of electronic cards and the respective invoice, or equivalent document, must be issued in the name of the holder of the respective card, from which it follows that the tax exemption/reduction is conditional not only on the registration of supplies in the TPA, but also on the condition that there is a sales document issued in the name of the holder of the micro-circuit card used, both conditions being inseparable" considering, therefore, that "the rules for marketing GCM are thus not met, whose violation has as a consequence the loss of the tax benefit" and projecting a debt in terms of ISP and CSR in the total amount of € 46,573.44."

  • The Claimant submitted a reply in the context of prior hearing.

  • In March 2017, the Claimant was notified of the conclusions of the customs inspection report and of the Order dated 09.03.2017 of the Head of the Anti-Fraud Customs Services Directorate: "I agree with the content and conclusions of the Report. Notify; Forward to the Customs Office of..., for assessment and collection; Also forward to the Finance Directorate of Lisbon for purposes of VAT assessment and collection, as it is the entity competent for this purpose; Prepare a Notice Record regarding the irregularities that were found".

  • The Claimant was notified of Office n.º ... of 14.11.2017 from the Director of the Customs Office of... who assessed the debt for ISP, CSR and compensatory interest in the total amount of € 50,013.49, to be paid at that same Customs Office, which materialized in the tax act for ISP, CSR and compensatory interest with the Assessment Record n.º..., of 13.11.2017.

  • On 29.11.2017 the Claimant made payment of the said debt in the total amount of € 50,013.49 (€ 13,275.60 in respect of CSR, € 33,297.84 in respect of ISP and € 3,440.05 in respect of compensatory interest).

  • A service order n.º OI2017... was also issued for the performance of an internal inspection procedure for the period 2015, with the purpose of implementing the correction in respect of VAT due as a result of the corrections promoted by the Anti-Fraud Customs Services Directorate, the Claimant having been notified, in December 2017, of the respective draft corrections, which assessed an amount of € 5,884.32 to be additionally assessed by reference to May 2015.

  • In December 2017 the Claimant was notified of the corrections resulting from internal analysis, which maintained the draft corrections, determining the "(…) additional assessment of VAT in default for May, in the amount of 5,884.32 euros, corresponding to the differential between the application of the standard rate of 23% - in accordance with letter c) of n.º 1 of article 18.º of the VAT Code – and the intermediate rate 13%, applied by the taxpayer, calculated on the value of the consideration obtained, pursuant to n.º 1 of article 16.º of the same provision (…)".

  • The Claimant was notified of the VAT tax act for the period 2015/05, embodied in the VAT assessment statement n.º 2017 ... of 29.12.2017, in the accounts settlement assessment statement n.º 2018 ... of 02.01.2018, in the total amount of € 5,884.32, in the VAT interest assessment statement n.º 2017 ... of 29.12.2017 and in the accounts settlement statement n.º 2018 ... of 02.01.2018, in the total amount of € 575.85.

  • The Claimant made payment of the said amounts of € 5,884.32 and € 575.85.

4.2 Facts Not Established

There are no facts relevant for the decision of the case that have not been deemed established.

4.3 Justification for Establishing the Factual Matters

The facts were deemed established on the basis of the documents attached with the request for arbitral decision, in the administrative file, in facts stated by the Parties in their respective procedural documents regarding which there is no dispute, and in the witness evidence produced at hearing.

Regarding the factual matters, the Court does not have to rule on everything alleged by the Parties; rather, it has the duty to select the facts that are important for the decision and to distinguish the established and non-established matters (cf. article 123.º, n.º 2, of the CPPT and article 607.º, n.º 3 of the CPC, applicable by virtue of article 29.º, n.º 1, letters a) and e) of the RJAT).

The facts are selected according to their legal relevance, which is determined in light of the various possible solutions for the case (cf. the previous article 511.º, n.º 1, of the CPC, now article 596.º, applicable by virtue of article 29.º, n.º 1, letter e) of the RJAT).

Taking into account the positions assumed by the Parties, the facts listed above are deemed established with relevance for the decision.

5. Legal Matters

The tax regime for coloured and marked diesel (GCM) is set out in the Excise Tax Code (CIEC), approved by Decree-Law n.º 73/2010, of 21 June, with the amendments that were subsequently introduced to it.

Article 93.º of the CIEC, relating to the tax benefit embodied in the application of reduced rates of Tax on Petroleum Products and Energy regarding the use of certain petroleum products, namely coloured and marked diesel (GCM), in specific situations, establishes the following:

"Reduced Rates

(Wording given by Law n.º 64-B/2011, of 30 December)

1 — Coloured and marked diesel, heating diesel and petroleum are taxed at reduced rates with the additives defined by order of the government member responsible for the finance area.

2 — Coloured and marked petroleum can only be used in heating, lighting and in the uses provided for in n.º 3.

3 — Coloured and marked diesel can only be consumed by:

a) Stationary engines used in irrigation;

b) Vessels referred to in letters c) and h) of n.º 1 of article 89.º;

c) (Wording given by article 211.º, of Law n.º 42/2016, of 28 December) Agricultural tractors, combine harvesters, rotary hoes, motorized hoes, motorized reapers, self-propelled potato harvesters, pea harvesters, forage harvesters for silage, tomato harvesters, swathers-conditioners, grape harvest vibrators for harvesting olives and other fruits, as well as other equipment, including those used for aquaculture activities and fishing with the seining method, approved by order of government members responsible for the finance, agriculture and maritime areas;

d) Vehicles for the transport of passengers and goods by rail;

e) Fixed engines;

f) Autonomous refrigeration engines, installed in heavy vehicles for the transport of perishable goods, powered by separate fuel tanks, and which have ATP certification (Perishable Goods Transport Agreement), in the terms to be defined by order of the government members responsible for the finance, agriculture and transport areas.

4 — Heating diesel can only be used as industrial, commercial or domestic heating fuel.

5 — (Wording given by Law n.º 114/2017, of 29 December) Coloured and marked diesel can only be acquired by holders of the electronic card instituted for purposes of controlling its allocation to the destinations referred to in n.º 3, and the owner or the person legally responsible for the operation of authorized public sales points is responsible for payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to coloured and marked diesel, in relation to the quantities they sell and which are not properly recorded in the electronic control system, as well as in relation to the quantities for which the corresponding invoices with the tax identification of the card holder are not issued.

(...)"

At the date of the facts of the case, in 2015, n.º 5 of the same article 93.º, stated the following:

"5 — (Wording given by Law n.º 82-B/2014, of 31 December) Coloured and marked diesel can only be acquired by holders of the electronic card instituted for purposes of controlling its allocation to the destinations referred to in n.º 3, and the owner or the person legally responsible for the operation of authorized public sales points is responsible for payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to coloured and marked diesel, in relation to the quantities they sell and which are not properly recorded in the electronic control system, as well as in relation to the quantities for which the corresponding invoices in the name of the card holder are not issued."

As regards ISP exemptions, article 89.º of the CIEC states the following:

"1 — The following petroleum and energy products are exempt from tax, as proven:

a) Those used for purposes other than as fuel, except as regards lubricating oils classified under CN codes 2710 19 81 to 2710 19 99;

b) Those used in air navigation, with the exception of private recreational aviation;

c) Those used in coastal and inland maritime navigation, including fishing and aquaculture, but with the exception of private recreational navigation, as regards products classified under CN codes 2710 19 41 to 2710 19 49 and 2710 19 61 to 2710 19 69;

(…)

h) Those used in dredging operations in ports and navigable waterways, but excluding the commercial extraction of sand that is not aimed at de-silting, as regards products classified under CN codes 2710 19 41 to 2710 19 49 and 2710 19 61 to 2710 19 69;

(…)

7 — The exemptions provided for in letters a), c), d), e), f), h), i) and j) of n.º 1 and in letters a), c) and e) of n.º 2 depend on prior recognition by the competent customs authority."

The regime set out in the CIEC, relating to the taxation and marketing of GCM, was regulated by Orders n.ºs 117-A/2008, of 8 February, and 361-A/2008, of 12 May, approved during the validity of the former Excise Tax Code, approved by Decree-Law n.º 566/99, of 22 December, which was later revoked by n.º 1 of article 7.º of the Decree-Law that approved the current CIEC. This regulation, as well as the remaining regulatory provisions approved in light of the previous CIEC, remain in force by virtue of the transitional provision contained in article 5.º of Decree-Law n.º 73/2010, of 21 June.

Order n.º 117-A/2008[4] regulates the formalities and procedures relating to the recognition of tax benefits, to the control of exemptions and reduced rates provided for in n.º 1 of article 71.º and article 74.º of the CIEC (current articles 89.º and 93.º of the CIEC in force), and also regulates the matter of recognition of the benefit relating to the use of coloured and marked diesel in the uses referred to in n.º 3 of article 93.º, through the prior allocation of a micro-circuit/electronic card, establishing the following:

"TITLE I

General Provisions

1.º This order regulates the formalities and procedures applicable to the recognition and control of exemptions and reduced rates of tax on petroleum and energy products (ISP) provided, respectively, in n.º 1 of article 71.º and in article 74.º of the Excise Tax Code, approved by Decree-Law n.º 566/99, of 22 December, briefly referred to as CIEC.

2.º Natural or legal persons who, provably, use petroleum and energy products subject to ISP in the activities or equipment provided for in the legal provisions referred to in the previous number may benefit from exemption or from the application of a reduced rate of tax, provided they meet the following conditions:

a) That activity is duly declared, in accordance with the applicable tax legislation, except when dispensed with by law or by the nature of the exemption;

b) They have their tax and social security situation regularized;

c) They have complied with their declaration obligations in respect of income tax and value added tax.

3.º The competence for the act of recognition and subsequent control and re-evaluation of the prerequisites and conditions of tax benefits is defined in n.ºs 17.º, 32.º, 36.º, 38.º, 39.º, 41.º, 46.º, 50.º, 56.º, 60.º, 61.º and 64.º of this order.

4.º Requests for exemption or reduction of the tax rate must be accompanied by photocopies of the following documents, without prejudice to other documentation deemed necessary:

a) Tax identification card;

b) Activity licensing document, when required.

5.º Tax benefits realized through the use of coloured and marked diesel are carried out mandatorily through the use of a micro-circuit card, provided for in n.º 5 of article 74.º of the CIEC, which is issued by the General Directorate for Agriculture and Rural Development (DGADR) and sent to the requesters by the entity competent for the recognition of the tax benefit in question.

6.º The cards referred to in the previous number are personal and non-transferable, with the respective holders being responsible for their regular use.

CHAPTER II

ISP Exemption for Use in Commercial Navigation

28.º The ISP exemptions provided for in letters c) and h) of n.º 1 of article 71.º of the CIEC cover uses in vessels which, for purposes of this order, are designated as commercial navigation.

29.º The provision provided for in the previous number includes vessels actually used in the following activities:

(…)

e) Dredging operations in ports and navigable waterways, with the exception of equipment used in sand extraction for commercial purposes.

30.º The supplies of coloured and marked diesel to the vessels referred to in the previous number are recorded through the mandatory use of the micro-circuit card issued for this purpose, with all supplies being controlled by the Fiscal Brigade of the National Republican Guard, through the use of a micro-circuit card, issued under the responsibility of that corporation."

Order n.º 361-A/2008, of 12 May, which establishes the rules for GCM marketing and respective control mechanisms, establishes, in turn, the following:

"5.º Coloured and marked diesel can only be sold at supply points to beneficiaries of an exemption or reduced rate of ISP who are holders of micro-circuit cards issued for this purpose by the DGADR, through which all transactions of coloured and marked diesel are recorded in the computer system managed by the Interbank Services Company (SIBS).

6.º Sales to which the previous number refers are mandatorily recorded at POS terminals at the moment they occur.

7.º Supplies to authorized equipment to consume coloured and marked diesel that cannot be effected at the supply point location, namely some agricultural and forestry equipment and fixed engines, may be recorded in a mobile POS terminal, at the time and place of the respective supply.

8.º The recording in the computer system, through POS terminals, of each supply effected, does not dispense with the issuance of the respective invoice or equivalent document, issued in the name of the holder of the respective micro-circuit card.

9.º The records of the transactions referred to in n.º 5 are sent in computer format by SIBS to the DGADR, which, in addition to the national coordination functions incumbent upon it, manages the database relating to coloured and marked diesel and is responsible for issuing, suspending or canceling the cards.

(…)

11.º Coloured and marked diesel can only be supplied to the equipment provided for in n.º 3 of article 74.º of the CIEC, after verification by the competent entity of the prerequisites and conditions required under the applicable legislation and the allocation to the respective beneficiaries of the card referred to in n.º 5.º.

12.º In the event of typing errors or other anomalies verified in the use of POS terminals, these must be immediately reported, in writing, preferably by electronic mail, to the DGADR, in order for the respective corrections to be made.

13.º Oil companies must send to the DGAIEC, by the last working day of each month, a computer file listing with the sales or supplies of coloured and marked diesel to supply points or to distributors, carried out in the previous month, with indication of the respective tax identification numbers and the POS terminal.

14.º In the event that distributors carry out supplies to supply points, oil companies must obtain from the said distributors the information on the supplies by them effected to the said supply points, with indication of the respective tax identification numbers and the POS terminal.

15.º The control of the quantities of coloured and marked diesel sold at supply points is the responsibility of the DGAIEC, and the DGADR must provide the DGAIEC with access to the database referred to in n.º 9.º."

In accordance with the provisions of n.ºs 1 and 2 of article 88.º (objective scope) of the CIEC, road diesel and coloured and marked diesel are subject to Tax on Petroleum Products and Energy.

It results, therefore, from the legal and regulatory framework described that it is the legislator's intention that only GCM used for certain purposes should benefit from the ISP exemption or reduced rate. Taking account of these limitations to the exemption/reduced rate regime, a special control mechanism was created in which purchasers of the product must be holders of the electronic card allocated by the services of the DGADR of the Ministry of Agriculture, the allocation of this card depending on proof of ownership or operation of eligible equipment.

The reading or recording of this card in terminals connected to the computer system instituted for purposes of controlling the acquisition and allocation of GCM are mandatory at the time of supply, establishing a rule of tax liability of the owners or persons responsible for the operation of public GCM sales points whenever the supplies effected are not properly recorded.

Furthermore, n.º 8 of Order n.º 361-A/2008 establishes that an invoice or equivalent document must be issued in the name of the holder of the said electronic card.

From the analysis of the documents attached as doc. n.º 9 it results with reasonable certainty that the 119,600 l sold by the Claimant to C... SL were subsequently transmitted until they supplied the dredge B...– equipment that actually consumed that quantity of GCM, as authorized by the competent entity that allocated to it the micro-circuit card n.º ... and confirmed by the Fiscal Brigade of the GNR (present at the time of sale) and by the entity E..., S.A. itself (through the stamp on the delivery notes).

It thus results from the factual data presented by the Claimant to these proceedings that, although the 119,600 l of GCM were not sold directly by the Claimant to the owner of the dredge B..., it was this equipment that consumed that quantity of GCM entitled by the sales invoice n.º....

Notwithstanding it being considered, as it also appears to be considered by the AT, that the GCM in question in the present proceedings was actually used by the dredge holding the beneficiary card used in the electronic processing of the supply operation, the question that arises is whether the Claimant should nonetheless be held responsible under n.º 5 of article 93.º of the CIEC for the fact of not having issued an invoice directly to the holder of the dredge, but rather to an intermediary.

N.º 8 of Order n.º 361-A/2008 establishes, it will be recalled, the following:

"8.º The recording in the computer system, through POS terminals, of each supply effected, does not dispense with the issuance of the respective invoice or equivalent document, issued in the name of the holder of the respective micro-circuit card."

And n.º 5 of article 93.º establishes the following:

"5 – Coloured and marked diesel can only be acquired by holders of the electronic card instituted for purposes of controlling its allocation to the destinations referred to in n.º 3, and the owner or the person legally responsible for the operation of authorized public sales points is responsible for payment of the amount of tax resulting from the difference between the level of taxation applicable to road diesel and the rate applicable to coloured and marked diesel, in relation to the quantities they sell and which are not properly recorded in the electronic control system, as well as in relation to the quantities for which the corresponding invoices with the tax identification of the card holder are not issued."

The rule which establishes the obligation to issue an invoice or equivalent document in the name of the holder of the micro-circuit card is, therefore, the regulatory rule provided for in n.º 8 of Order n.º 361-A/2008 – whose interpretation constitutes the core of the discussion in the present case. Let us proceed then.

The rule in question establishes the issuance of an invoice as an additional obligation to another one – the recording of the supply operation in the POS terminal. The combination of obligations results clear from the very normative language: "the recording in the computer system, through POS terminals, of each supply effected, does not dispense with the issuance of the respective invoice (…)".

Furthermore, from the combined interpretation of this text of the order with the text of Order n.º 117-A/2008, more specifically with what is contained in n.º 30 of the latter, there also results an additional means of control of these GCM supply operations embodied in on-site control performed by the GNR (Fiscal Brigade) and which ensures that the supply is effected to the beneficiary whose identification is entered in the POS terminal. The manner in which this operation unfolds results from the facts deemed established in this decision, and it is evident that the supply will not take place if the fiscal brigade cannot verify that the one receiving the diesel is, effectively, the beneficiary registered in the POS terminal.

From the framework described it thus results that the control of the beneficiary status of those receiving the supply is performed in a twofold manner: (i) on the one hand through recording in the computer system, through POS terminals, of each supply effected, (ii) on the other hand through on-site control performed by the GNR and which prevents the supply from being effected to anyone other than the beneficiary registered in the POS terminal.

In the AT's understanding, there then follows another obligation: the issuance of an invoice by (1) whoever makes the supply to (2) the holder of the object of the supply. This invoice, which will always have to be issued by whoever makes the supply (1), can never be issued to a third party (3) that is not the holder of the object of the supply (2), as occurred in the present case. The AT justifies this reading of the rule in question with the need for "subsequent control of the reality and regularity of GCM supplies carried out, based on records and accounting documentation, which prove the supply circuit from the supplier to the authorized recipient and legally provided purpose" (cf. point 21 of the arguments presented by the Respondent).

The Claimant reads the rule differently, finding in it only the need for an invoice to be issued to the beneficiary of the supply, but not necessarily by whoever carries it out. In other words, it understands to be admissible, in light of the applicable legal and regulatory framework, that A supplies B, although the order for the supply is placed by C to whom the invoice is issued by A.

The rule in question establishes that: "the recording in the computer system, through POS terminals, of each supply effected, does not dispense with the issuance of the respective invoice or equivalent document, issued in the name of the holder of the respective micro-circuit card."

It appears to us evident from this that, for each supply effected, an invoice must be issued. It appears to us equally evident that this invoice must be issued to the holder of the micro-circuit card, that is, to the certified beneficiary. It does not appear evident to us from the rule in question that this invoice which is issued to the beneficiary must be issued directly by whoever makes the supply and not by a third party (provided, obviously, that there are contractual relations that support this circuit, as occurs in the present case).

Does the introduction of these third parties, described in the present case as "intermediaries", prejudice the control of fraud in the marketing of coloured and marked diesel? Is it, therefore, the obligation for the commercial relationship to be established only between the diesel supplier and the holder of the object of the supply, without third parties involved, justified in light of the need to control fraud? The AT mentions the need to carry out subsequent control of the operations, that is, even after the supplies take place and knowing that these only occur if the GNR verifies that the supply is being made to an object holding the beneficiary's card. On the other hand, it believes that this subsequent control can only occur if the commercial relationship is established only between the supplier and the holder of the object of supply.

We have doubts that this is so. For example, in the concrete case, it was possible for the AT to know the entire commercial circuit behind the supply: it was possible to know the entities involved, the invoices issued between them and to trace the supply itself, that is, to understand that the quantities of GCM that were supplied to the dredge in question, on the date in question, were indeed the quantities of diesel transacted between all those involved in the operation, including supplier, beneficiary and third parties. On the other hand – and what appears to be truly relevant for the control of the tax benefit associated with GCM – there is no doubt that the supply was made to the dredge B..., holder of the card that certifies its status as beneficiary of the tax benefit in question. And this certainty did not require any accounting or invoice control to arise – it arises immediately when the supply occurs by virtue of the twofold control to which we alluded above (use of the beneficiary's card and control of the operation by the GNR).

The AT's interpretation thus proves to be excessively burdensome for the economic operators and activity involved, without this burden appearing to result in any added benefit for the control of fraud in the application of the tax benefit in question. In other words, the public benefit which it is sought to ensure (fraud control) does not require such a compression of the right of free economic initiative provided for in n.º 1 of article 61.º of the Constitution – "1. The initiative of private economic activity is exercised freely within the terms defined by the Constitution and by law and taking account of the general interest."

Article 61.º of the Constitution is part of Title III, relating to "Economic, social and cultural rights and duties". Nevertheless, the right of free initiative of private economic activity which it enshrines is considered a right analogous to a right, liberty and guarantee – see, on this point, J.J. Gomes Canotilho and Vital Moreira, when they state that "in recognizing the freedom of private economic initiative (n.º 1), the Constitution certainly considers it (after the first constitutional revision) as a fundamental right (and not merely as an objective principle of economic organization), although without directly including it among the rights, liberties and guarantees (benefiting, however, from the substantive analogy with them, as a determinable right with immediate enforceability).[5]

The categorization of freedom of economic initiative as a right analogous to rights, liberties and guarantees obliges us necessarily to the regime provided for in article 18.º of the Constitution, from which it results that:

  • The constitutional provision relating to this right is directly applicable and binds both public and private entities;

  • The restriction of this right can only occur in cases directly provided for in the Constitution, with restrictions being limited to what is necessary to safeguard other rights or constitutionally protected interests;

  • Laws restricting rights, liberties and guarantees must be of a general and abstract nature and cannot have retroactive effect or diminish the extent and scope of the essential content of constitutional provisions.

Now, regardless of the problematic question of whether only laws in the formal sense (or also regulations, as occurs in the concrete case) can restrict these rights – and whether the concepts of "conformation", "regulation" or "concretization" do not comprise in themselves a restrictive effect to a greater or lesser extent – it appears clear that, in the present case, we are dealing with a regulatory rule which, interpreted in the sense defended by the AT, would restrict beyond what is necessary to safeguard the constitutionally protected interest "control of tax fraud" the constitutionally protected right "freedom of private economic initiative". As such, we do not understand that to be the interpretation adequate to the safeguarding of this right.

In conclusion, this Court understands, in the terms and for the purposes of the provision of article 204.º of the Constitution, that the rule which results from the interpretation given by the AT to the normative language of n.º 8 of Order n.º 361-A/2008, as well as, consequently, to that of n.º 5 of article 93.º of the CIEC, is unconstitutional and, as such, must be, in the present case, disapplied. Consequently, the assessed amounts in question constitute illegal acts and must be annulled for lack of legal basis for their issuance.

Regarding Indemnificatory Interest

The Claimant further petitions for payment of indemnificatory interest. Pursuant to the provision of letter b) of article 24.º of the RJAT, the arbitral decision on the merits of the claim against which no appeal or challenge lies is binding on the tax administration from the end of the period provided for appeal or challenge, and the latter must, in the exact terms of the success of the arbitral decision in favor of the taxpayer and until the end of the period provided for spontaneous execution of sentences of tax courts, "restore the situation that would exist if the tax act subject to the arbitral decision had not been carried out, adopting the necessary acts and operations for this purpose".

Although article 2.º, n.º 1, letters a) and b), of the RJAT uses the expression "declaration of illegality" to define the competence of arbitral courts functioning in the CAAD, making no reference to condemnatory decisions, it should be understood that the powers which in judicial challenge proceedings are attributed to tax courts are included in its competences, and this is the interpretation which is attuned to the sense of the legislative authorization on which the Government based itself to approve the RJAT, in which it proclaims, as first directive, that "the tax arbitration process must constitute an alternative procedural means to the judicial challenge proceedings and to the action for the recognition of a right or legitimate interest in tax matters".

The judicial challenge proceedings, although essentially a process for annulling tax acts, permits the condemnation of the AT to pay indemnificatory interest, as is clear from article 43.º, n.º 1, of the General Tax Law, which establishes that "indemnificatory interest is due when it is determined, in an amicable review or judicial challenge, that there was an error attributable to the services resulting in payment of the tax debt in an amount exceeding that legally due" and from article 61.º, n.º 4 of the CPPT (in the wording given to it by Law n.º 55-A/2010, of 31 December, which corresponds to n.º 2 in the original wording), which establishes "if the decision recognizing the right to indemnificatory interest is judicial, the payment period is calculated from the beginning of the period for its spontaneous execution".

Thus, n.º 5 of article 24.º of the RJAT, by establishing that "payment of interest, regardless of its nature, is due in the terms provided for in the General Tax Law and in the Code of Tax Procedure and Process" must be understood as permitting the recognition of the right to indemnificatory interest in arbitral proceedings.

Pursuant to article 43.º of the General Tax Law, in the part applicable here, "indemnificatory interest is due when it is determined, in an amicable review or judicial challenge, that there was an error attributable to the services resulting in payment of the tax debt in an amount exceeding that legally due".

In the concrete case, there is an error of law, attributable to the AT, for having proceeded to the incorrect interpretation of article 8.º of Order n.º 361-A/2008 and of article 93.º, n.º 5 of the CIEC, so the Claimant is entitled, in accordance with the provisions of articles 24.º, n.º 1, letter b), of the RJAT and 100.º of the General Tax Law, to indemnificatory interest, in the terms established in articles 43.º, n.º 1, of the General Tax Law and 61.º of the CPPT, calculated at the rate resulting from n.º 4 of article 43.º of the General Tax Law, until the date of processing of the respective credit note.

6. Decision

In accordance with the above, this Arbitral Tribunal decides as follows:

  • To declare illegal the contested tax acts, corresponding to the additional assessments of Tax on Petroleum Products and Energy (ISP), Road Service Contribution (CSR) and respective compensatory interest, relating to the year 2015, in the total amount of € 50,013.49, identified with the Assessment Record n.º ... of 13.11.2017 and the tax act of Value Added Tax (VAT) for the period 2015/05, embodied in the VAT assessment statement n.º 2017 ... of 29.12.2017 and the accounts settlement assessment statement n.º 2018 ... of 02.01.2018, in the total amount of € 5,884.32, as well as in the respective VAT interest assessment statement n.º 2017 ... of 29.12.2017 and the accounts settlement statement n.º 2018 ... of 02.01.2018, in the total amount of € 575.85;

  • To condemn the Respondent to payment of the indemnificatory interest that proves to be due in the terms established in articles 43.º, n.º 1, of the General Tax Law and 61.º of the CPPT, calculated at the rate resulting from n.º 4 of article 43.º of the General Tax Law, until the date of processing of the respective credit note;

  • To condemn the AT to payment of the costs of the proceedings.

7. Value of the Proceedings

In accordance with the provisions of articles 306.º, n.º 2, of the Code of Civil Procedure, 97.º-A, n.º 1, letter a), of the CPPT and 3.º, n.º 2, of the Regulations of Costs in Tax Arbitration Proceedings, the value of the proceedings is fixed at € 56,473.66 (fifty-six thousand, four hundred and seventy-three euros and sixty-six cents).

8. Costs

Pursuant to the provision of article 22.º, n.º 4, of the RJAT, the amount of costs is fixed at € 2,142.00 (two thousand, one hundred and forty-two euros) in accordance with Table I attached to the Regulations of Costs in Tax Arbitration Proceedings, to be borne by the Tax and Customs Authority.

Lisbon, 7 January 2019

The Arbitrator

(Raquel Franco)

[1] We shall refer to this matter further on in the decision.

[2] 2 — Arbitral tribunals function with a sole arbitrator when:

a) The value of the claim for decision does not exceed twice the value of the jurisdiction of the Central Administrative Court; and

b) The taxpayer opts for not appointing an arbitrator.

[3] The assessment act for ISP and CSR and respective compensatory interest and the assessment act for VAT and respective compensatory interest.

[4] Amended by Orders n.º 762/2010, of 20 August and n.º 206/2014, of 8 October.

[5] Cf. Constitution of the Portuguese Republic Annotated – articles 1.º to 107.º, 4th revised edition, 2007, p. 789.

Frequently Asked Questions

Automatically Created

What is ISP (Imposto sobre os Produtos Petrolíferos e Energéticos) and how does it apply to petroleum products in Portugal?
ISP (Imposto sobre os Produtos Petrolíferos e Energéticos) is Portugal's excise tax on petroleum and energy products, governed by the Código dos Impostos Especiais de Consumo. It applies to petroleum products including diesel, gasoline, and marked fuels. ISP exemptions exist under Article 89 for specific uses, including commercial navigation (vessels) when using coloured and marked diesel (GCM). Suppliers must comply with strict marketing and control rules, including use of micro-circuit cards issued to authorized vessels. The tax is collected at the point of supply, with marketers responsible for ensuring proper documentation and card verification, often supervised by GNR's Fiscal Brigade.
Can taxpayers challenge additional ISP, CSR, and VAT tax assessments through CAAD arbitration proceedings?
Yes, taxpayers can challenge additional ISP, CSR, and VAT assessments through CAAD (Centro de Arbitragem Administrativa) arbitration proceedings under Decree-Law 10/2011 (RJAT). The process allows declaration of illegality of tax acts including assessment statements and compensatory interest. For claims below €60,000, a sole arbitrator tribunal is mandatory per Article 5(2) RJAT, even if a collective tribunal is requested. The joinder of different tax claims (ISP, CSR, VAT) is permitted under Article 3(1) RJAT when they arise from the same factual circumstances and involve interpretation of the same legal principles, as occurred in this case involving GCM marketing compliance.
What is the Contribuição de Serviço Rodoviário (CSR) and how does it relate to ISP in Portuguese tax law?
Contribuição de Serviço Rodoviário (CSR) is Portugal's Road Service Contribution, an additional levy closely related to ISP on petroleum products. CSR applies alongside ISP to fuels used in road transport, forming part of the overall taxation structure for petroleum products. In this case, CSR was assessed together with ISP because the Tax Authority challenged the GCM (coloured and marked diesel) exemption eligibility. When ISP exemptions are denied, CSR typically follows the same treatment. Both are governed by excise tax regulations and are subject to the same marketing control requirements, including micro-circuit card usage and invoice issuance rules for marked fuels.
What are the procedural requirements for filing a tax arbitration request at CAAD when the claim value is below €60,000?
For CAAD arbitration requests below €60,000, Article 5(2) RJAT mandates a sole arbitrator tribunal, regardless of whether parties request a collective tribunal. The request must comply with Articles 2(1)(a), 5(3)(a), 6(2)(a), and 10(1)(a) RJAT. The claimant must identify contested tax acts (assessment statements, settlement statements), specify amounts including compensatory interest, and demonstrate the legal basis for challenge. The CAAD President accepts requests and notifies the Tax Authority automatically. The Deontological Board appoints the arbitrator within the timeframes specified in Article 6(2)(a) and 11(1)(b) RJAT. The tribunal is formally constituted following Article 11(1)(c) procedures, typically within 2-3 months of filing.
How are compensatory interest (juros compensatórios) calculated on additional ISP and VAT assessments in Portugal?
Compensatory interest (juros compensatórios) on additional ISP and VAT assessments in Portugal is calculated from the date when tax should have been paid until actual payment, as governed by the Lei Geral Tributária (LGT) Article 35. For ISP assessments, interest applies from the original due date of the excise tax obligation. For VAT, it runs from the periodic return deadline. The rate is set annually by ministerial order, typically 4-5% annually. In this case, ISP compensatory interest was assessed via the Assessment Record, while VAT interest was calculated through separate interest assessment statements (demonstrações de acerto de juros) issued alongside the main VAT assessment statements, representing the time value cost of unpaid taxes to the State.